SA has ‘most expensive’ cost chain

Exporters are feeling the pain of South Africa’s high port costs as margins are squeezed in an increasingly competitive environment. “What is clear to me is that South Africa has the most expensive cost chain between South Africa, Spain, Morocco, Chile and Peru by far,” Piet Van Rensburg of perishable specialist LGS Exports told FTW. “Some of these countries’ costs are about 30% lower than South Africa. There is a certain component of shipping in the cost chain, but our competitors actually pay the same or more for their shipping.” He explained that the biggest cost difference lay in the country’s port costs, some of which “just don’t make sense”. Port costs, coupled with royalties and levies from the US Department of Agriculture, CPF levies, Perishable Products Export Control Board levies, and the Citrus Growers’ Association levy are hitting exporters. “Most countries have one or two of these and even then levels are lower than South Africa’s,” said Van Rensburg. “So, I think we are starting to feel the pain – less and less profit. The prices in the market stay the same. The squeeze lies in between.” He said that the high costs would not result in any changes to the way LGS does business. However, lack of profits could force it to structure things differently.